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Home > Other Stuff > Free Property Investing Articles > The Next Property Boom
The Next Property Boom
By Paul Tooze
Content thanks to EquityResource.com.au
update September 2009:
I am aware that this article is now out of date and it's contents are not to be relied upon as being suitable for today's climate. But it is interesting to read non the less. It does show that property and investing is cyclacle. The movement of property prices, rent prices, the timing for investors and home buyers can all be seen in past events. Read here for more information on this.
So, I have decided to leave the article intact. An historical reminder if you like. Please feel free to comment on this.
Don’t Let The Gap Get Too Wide
They say the rich are going to get richer and the gap between the have’s and the have not’s is going to widen, and they’re right! Because, of the unique set of fundamentals now present in the Australian economy which are unique compared to any other time in our history. It’s going to allow those who have the resources, to profit handsomely. But, you already knew all of this, right?
So, now you’re probably saying, “For goodness sakes! Give me something I can use to improve my financial future”!
Okay……Okay…! Read on as this newsletter is all about the incredible opportunities that is now available in the Australian investment property market.
Dynamic Conditions Are Pointing The Way
You see, economic forecasters are saying, there’s a chronic housing shortage throughout Australia and it’s going to get worse and not necessarily better in the foreseeable future, at least 10 years plus.
In part, this under supply of housing is related to the ongoing shortage of skilled labour in Australia, with the predictions stating there’s no relief in sight for this either.
Based on this information and other dynamics currently in play in the market, they’re predicting the national median house price will increase by 40-50% over the next 5 years.
Additionally, rental vacancy rates in every major national centre throughout Australia are at critically low levels. The national rental vacancy rate is being quoted at less than 1.5%. That in real terms is equal to about 5 days vacancy in a year for a rental property. Hardly enough time to get the old tenant out and shampoo the carpet before the new tenant shows up with the furniture van.
The Rent Went From $300 to $475 Before It Was Even Leased
There was the story recently on ‘A Current Affair’, where in a Sydney inner suburb a 3 bedroom house went on the market for $300 per week rent and at the first open house 90 people showed up. Overall, the agent said he’d received more than 150 written applications and they eventually leased it for $475 per week.
7-8 months ago you could’ve rented a 2 bedroom apartment at Newington (Sydney’s Olympic Village) for $320-$340 per week. Today, there’s a limited number on the market for $420-$450 per week. And from our ongoing research we’re finding similar results all throughout the country.
Rising Interest Rates Providing Opportunity
Next, interest rates are at a 12 year high and this is stopping tens of thousands of people from purchasing property for one reason or another. But this will still not alleviate the housing shortage, as experts say the shortage will continue to grow because of other demand factors in the market place anyway.
In fact, it will only exacerbate the rental property shortage. So, because of this they’re predicting that rental rates will increase by 50% in all Australian capital cities over the next 5 years.
At this stage, if you’re starting to get the picture of this huge dam starting to rapidly fill up with water to the point of over flowing, you’re right on the money.
When The Dam Bursts
Because, when interest rates stop rising (which may not be too far away), or, even start to fall, then there’s going to be a huge surge in demand for housing, probably the likes of which we’ve never seen before, resulting in a price explosion.
What The Well Informed Are Saying According to Steve Martin, president of the NSW Real Estate Institute (REINSW), “Investors looking for a sound alternative to the stock market would be wise to consider residential property”.
CPI figures show rents are growing at their fastest rate since the early 1990’s. This indicates property investors are already realising excellent returns on their investment as demand for housing far outpaces supply against a background of soaring demand and limited supply for housing. Coupled with the forecasts of increased capital growth and increasing rents, it is going to give investors windfall returns on their investment properties.
Saving On Legwork Equity Resource provide ‘High Performance’ investment properties in high growth, high rental yield properties in well researched select areas throughout Australia.
Our web site www.equityresource.com.au in the ‘Property Showcase’ section has a limited representation of some of the properties we have available. It’s limited because we don’t want to give all of our valuable information away free to our competitors. Besides what you see in the ‘Property Showcase’ we have many other opportunities available and we’re happy to give you that additional information, if you’d like to contact us.
Additionally, we offer a no cost/obligation financial analysis which will show you the viability of your investing in property. This analysis will cover all of the angles for you, including your affordability levels, financing options etc.
Investment Property Tips
According to the ANZ Economics Report, January 2008: “In raw terms since 1984 residential property has enjoyed an extraordinary compound growth of 13.4% (13.8% equities), but in risk adjusted terms, residential property has delivered vastly superior returns to all other broad asset classes”.
John Edwards, Residex CEO: “Investors are re-entering the market as supply remains tight and rentals increase in a market with low vacancy rates and I expect to see this continue”.
If you would like some no cost/obligation assistance with any of the above you can contact us or ask a question online.
Recommendations from PropertyBooks.com.au
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